In what is likely to be the largest laboratory industry transaction for 2013, Massachusetts-based Thermo Fisher Scientific has gone bicoastal, coming to terms to acquire California-based Life Technologies for $13.6 billion in cash and an assumption of $2.2 billion of its debt. The deal, which is expected to be finalized in early 2014, will create a giant company with nearly $15 billion in annual revenue and 50,000 employees—and control of billions of dollars worth of molecular tests and complex equipment such as sequencers. “The acquisition of Life Technologies enhances all three elements of our growth strategy: technological innovation, a unique customer value proposition, and expansion in emerging markets,” said Marc N. Casper, Thermo Fisher’s chief executive officer. “Our customers in research and applied markets will now be able to achieve even higher levels of innovation and productivity by working with the combined company. We’re especially excited about the new opportunities we will have to leverage our complementary offerings.” It also suggests to some industry observers that molecular testing, once the unsettled frontier of the laboratory sector, is beginning to show signs of consolidation. “There’s been a gradual consolidation of the diagnostic space. We’ve seen it for the past five years,” […]
In what is likely to be the largest laboratory industry transaction for 2013, Massachusetts-based Thermo Fisher Scientific has gone bicoastal, coming to terms to acquire California-based Life Technologies for $13.6 billion in cash and an assumption of $2.2 billion of its debt.
The deal, which is expected to be finalized in early 2014, will create a giant company with nearly $15 billion in annual revenue and 50,000 employees—and control of billions of dollars worth of molecular tests and complex equipment such as sequencers.
“The acquisition of Life Technologies enhances all three elements of our growth strategy: technological innovation, a unique customer value proposition, and expansion in emerging markets,” said Marc N. Casper, Thermo Fisher’s chief executive officer. “Our customers in research and applied markets will now be able to achieve even higher levels of innovation and productivity by working with the combined company. We’re especially excited about the new opportunities we will have to leverage our complementary offerings.”
It also suggests to some industry observers that molecular testing, once the unsettled frontier of the laboratory sector, is beginning to show signs of consolidation.
“There’s been a gradual consolidation of the diagnostic space. We’ve seen it for the past five years,” said Peter Lawson, an analyst with Mizuho Securities in New York.
However, Lawson does not see the market closing ranks.
“There is still plenty of space and time for a series of deals,” he said.
Ross Muken, a senior managing director with the ISI Group in New York, agreed that there remains a significant opportunity for other players. “Molecular testing is still wide open. Certain areas like cancer are almost the wild, wild west.”
Neither analyst believes that the deal will have much effect on the pricing of a primary lab product of both players: gene sequencers.
“There may be a blip for a year or two if there is a lack of innovation or a retrenchment,” Lawson said, “but the trend [in price] has been downward.”
As part of the acquisition, Mark P. Stevenson, Life Technologies’ president and chief operating officer, is expected to have a “significant leadership role” in the combined company, a statement said, but no other details were disclosed.
